Volatility hits Indian indices

Thu, 23 Jan Closing

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Indian equity markets had a rather volatile trading session today as they oscillated to either side of yesterday's close. While the morning session saw the indices struggling to stay afloat, buying activity intensified in the afternoon session pushing the indices above the dotted line. While the BSE-Sensex today closed higher by 36 points, the NSE-Nifty closed higher by 7 points. The BSE Mid Cap and the BSE Small Cap, however, bucked the trend and closed lower by 0.5% and 0.1% respectively. Gains were largely seen in FMCG and consumer durables stocks.

As regards global markets, most Asian indices closed weak today while most European indices have opened mixed. The rupee was trading at Rs 61.98 to the dollar at the time of writing.

Pharma stocks closed mixed today. While Sun Pharma and Ranbaxy closed firm, Biocon and Cipla closed into the red. Biocon announced its results for the third quarter and nine months ended December 2013. The company's topline grew by 10% YoY during 3QFY14 largely led by the strong performance of the contract research business. While the biopharmaceutical business grew by a tepid 2% YoY during the quarter, performance of branded formulations was better at 15% YoY. Revenues from contract research grew at a healthy pace of 31% YoY during the quarter. Biocon's operating margins improved by 1.6% during 3QFY14. This was largely due to a significant fall in R&D costs (as percentage of sales). Net profit growth (14% YoY) was lower than the 18% YoY growth in operating profits due to the reduction in other income and higher depreciation charges.

Most FMCG stocks closed firm today and the key gainers were Pidilite, Hindustan Unilever and Colgate. Colgate also announced results for the third quarter and nine months ended December 2013. The company clocked a 13.7% growth in revenues led by 10% volume growth. The toothpaste segment recorded a growth of 11% during the quarter. Robust growth in the company's brands such as Colgate Dental Cream, Active Salt, Max Fresh, Colgate Total and recently launched Visible White led to strong market gains. However, the strong topline growth failed to percolate at the net level due to a steep rise in other expenses that increased by 3.5% in proportion to sales. This together with a 0.9% increase in ad-spends to sales ratio more than offset the 2.1% savings in staff costs to sales ratio. As a result, the operating margin contracted by 2.2% during the quarter. At the net level, the company managed to register a higher 1.6% growth in profits aided by 38% rise in other income.